Philadelphia, PA asked in Bankruptcy for Maryland

Q: Is it possible to reaffirm or file motion to redeem cross-collateralization after Ch.7 discharge?

In 2014/2015 I took out an auto loan through my credit union, paid off loan by 2018, and filed Ch.7 in 2020. I had a credit card through the same credit union with about $1000 balance when the Ch.7 was discharged. I was never advised by the attorney, court, or credit union of the cross-collateralization clause. But now that the Ch.7 is discharged and the balance of the credit card discharged, there is no account or balance to pay off to satisfy the cross collateral. Now the credit union is refusing to release the lien on the vehicle title and provide a clear title. They told me that I can never sell my vehicle and that I'm stuck with it until it essentially can no longer be driven.

Is there any work-around for this situation? Is it possible to file a motion to redeem after the discharge? I have sent certified letters to the credit union but have not received any response. I need to sell this vehicle but it appears I'm stuck with it for the rest of its life.

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2 Lawyer Answers
Daniel Staeven
Daniel Staeven
  • Bankruptcy Lawyer
  • Annapolis, MD
  • Licensed in Maryland

A: Since the car was paid off in 2018 the release should have been given to you, regardless of any balance on the credit card, at that time. Said another way, the event that gave rise to the lien release happened before the bankruptcy case was filed. The cross collateralization clause cannot affect the title to the vehicle in an ipso facto way. I recommend hiring counsel to find out why this credit union is trying to claw back a right they do not have since the car was paid off prior to the bankruptcy case.

Good luck in your future endeavors.

David Luther Woodward and Timothy Denison agree with this answer

1 user found this answer helpful

David Luther Woodward
David Luther Woodward
  • Bankruptcy Lawyer
  • Pensacola, FL

A: All credit unions with which I have had experience including as a member and as a lawyer have deposit agreements with cross-collateralization. I think credit unions are a great asset to the economy, but I always advise my clients to be careful in their loan transactions including cards with the credit union.

I agree with Mr. Staeven but I fear you will get nowhere without a lawyer. So either resurrect your earlier lawyer or find a new one.

Good Luck


Timothy Denison agrees with this answer

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